How One Canadian Business Ingeniously Saved Themself from Bankruptcy 

Nobody said that owning a business would be easy. Plenty of us venture into the world of business building with nothing in mind but ambition and passion. Now, nobody is saying that having passion for your business isn’t one of the main elements of business ownership that will lead to success, but sometimes passion simply isn’t enough to ensure the success of a business.  

For anyone that has had the displeasure of studying or being exposed to the world of business, you will know just how complicated it is. There are numbers to crunch, stock to take note of and staff to employ. Though starting a business may seem exciting on paper, it is actually an extremely complicated challenge to set yourself, after all, there is no guarantee that your business will run as smoothly as you may like.  

For all of these reasons, it is no wonder why more than half of new businesses fail in their first quarter. Some business owners may notice that their businesses aren’t the success that they had first imagined they would be, while others find realize much too late and unfortunately have to deal with what all business owners dread- bankruptcy.  

Bankruptcy is arguably the worst thing that could happen to a business, as it means the business has lost all of the funds that it requires to be fully operational. Without these funds, the owner may be unable to pay their bills and their staff, which means that they are required to shut up shop and fire their trusted employees.  

A small business known as ‘Your Local Deli’ is one of the many businesses that has had to face the prospect of having to close due to bankruptcy. However, unlike many businesses out there, the Deli was able to survive the threat of bankruptcy. But how exactly did they manage it? 

Humble beginnings  

Your Local Deli was the creation of Emily Baker, who is a culinary student from Edmonton. Opening her own deli had always been Emily’s goal in life, so when she had finally completed culinary school, she took out a small bank loan and set forward to pursue her dream of being a business owner.  

Your Local Deli was no new concept to Emily, in fact, it was a business model that she had been thinking up since she was a young girl. Emily’s father owned his own restaurant, which meant that Emily was constantly exposed to the world of culinary excellence. As she aged, Emily became more and more involved in her father’s business. Starting off as a waitress, she became extremely popular in her local area for her excellent hospitality and fast responses.  

It wasn’t until her father experienced a staff shortage in the kitchen that Emily really discovered her love for making food. Emily was asked to take the place of a line chef and it was immediately obvious that she had the family gift of cooking. Once her father noticed this, he immediately taught her all that he knew.   

Opening the business  

When Emily was 24, she finally opened the business of her dreams. Though she was experienced in the world of cooking, she had absolutely no business experience. Because of this fact, her costs slowly started to outweigh her profit and the finances for the deli started to dwindle. Emily was at a loss and on the brink of bankruptcy until she had a genius idea. 

Reinvention  

She realized that the model that she had in place for her current business wasn’t working. She had also noticed that her premises were not up to the standard of other local delis. With this in mind and her last few dollars, she decided to completely redo her facility. 

The first thing she did was deep clean the building, they used a cleaning company in Edmonton for this, which gave her a blank canvas to really do what she wanted to do. She based her new business on the business that her father had owned, which had gained many fans over the years. Bringing this back to Edmonton gained the attention of some of these fans and they all flocked back to the restaurant to get a taste of the dishes that they once loved.  

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Why Are more Companies Accepting Payment in Bitcoin

The list of companies that accepts bitcoin as an official form of payment is continuing to expand. For those of you who don’t know, bitcoin is a type of cryptocurrency. A cryptocurrency is a form of digital money that people use to buy goods and services. It is a decentralized currency which means that no one person or government has control over it like they do with the dollar or the yen.

A bitcoin is basically a digital file that is stored in a digital wallet, it can be transferred in the same way as normal money and each transaction is recorded digitally. Bitcoin is the most popular and most well-known type of cryptocurrency as it was the first blockchain type of cryptocurrency created back in 2009. After bitcoin became well known many investors invested a lot of money into it making the value of bitcoin spike. The spikes and falls of the value of bitcoin have confused investors as the trends are almost unexplainable, however, even now in 2021, the value of bitcoin is still rising. Bitcoin is now valued at above $20,00 and is increasing in popularity, read on to find out what companies accept payment in bitcoin and why more companies are beginning to accept it.

 

Why it’s good for a company to accept payment in bitcoin.

Generally speaking for any company, the more different forms of payment the more customers they begin to attract as people with have different payment preferences so it’s best to accommodate for as many as possible. The most common payment forms that most companies offer include Visa, Mastercard, and Paypal. It’s good for a company to accept bitcoin as payment as the other methods have higher transaction fees. Mastercard, for example, charges anywhere between 1.55% to 2.6% per transaction and all other credit cards will have similar fees. Cryptocurrencies allow customers to avoid many of the transaction fees that all consumers hate such as overdraft fees and foreign transaction fees. While bitcoin does incur a fee, the fee is considerably lower, usually around 0.5% of any transaction. This is more appealing to consumers so by offering bitcoin as a way of paying a company will gain a competitive advantage over companies similar to them which will help their business to thrive.

 

What companies are accepting bitcoin.

Over the last 6 years, the amount of companies accepting bitcoin has payment has massively increased. The latest survey took place in 2020 and the results showed that 36% of US businesses had started to accept bitcoin as a form of payment. Some major companies that accept bitcoin include Wikipedia, Wikipedia are responsible for the largest ever open-source encyclopedia, they rely on donations to operate and have begun to accept donations in the form of bitcoin via BitPay. Microsoft is another major company that allows its users to pay with bitcoin, they allow you to top up your Microsoft account with bitcoin.

As well as major companies many multinational stores also are starting to accept bitcoin as payment. These include places such as Burger King who in their Venezuelan stores and their German stores accept bitcoin when ordering online for delivery. Also fast-food chain KFC marketed a ‘Bitcoin Bucket’ in their Canada stores and accepted Bitcoin as payment for this. Other companies include Overstock, Subway, Norwegian Air, Miami Dolphins, 4Chan, and Amazon. If you’ve invested in bitcoin and haven’t been spending it, well now you know that you can use it to buy anything from your weekly takeaway to airline tickets you can findbitcoinatm and start spending.

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Reducing Risk In Property Investment

Investing in real estate is a long-term plan, but it doesn’t come without risks. A lot can go wrong and you need to know how to avoid these pitfalls, or alternatively, know how to reduce them. It’s always best to seek expert advice, especially if you’re new to the game, but here are some general tips.

What are the risks?

Any investment is going to come with risks. It’s all about understanding how to reduce them and manage them.

Knowing that investing in real estate comes with its own set of gambles doesn’t mean you should avoid it; while property does carry risk, it’s comparably low compared to other asset classes. One key reason for this is that property is a necessity. This underpins its value and makes it less volatile.

Also, research and good planning can mitigate most of the risks involved.

Vacancy

Australia’s rising population is good for property investors. There seems to be a continual stream of possible tenants to fill vacant properties. If you choose a good property in a high demand area and with good amenities, it’s possible that you will never have to deal with a vacant lot.

However, the possibility of a vacant property is a risk you take. There are plenty of things you can do to mitigate this risk including minor renovations or refurbishments, ensuring your property is pet-friendly or by looking at a wider pool of tenants.

Undesirable tenants

Not every tenant you choose is going to be well behaved and you need to understand this before you start choosing. Some may not treat your property well, some may not pay rent on time, and some may even skip town in an attempt to avoid all costs. Sometimes, it’s impossible to see who these shoddy tenants are. In some cases, even the best tenants may turn purely because of a change in personal circumstances, for example, a loss of employment.

To avoid this, it’s best to have a property manager on hand. Often, a property manager will be able to recognise the unpleasant tenant from the good ones because they have experience in the matter. They’ll advise who to choose and then perform regular checks on the property. It’s also recommended that you get insurance to cover anything unexpected.

Change in circumstances

Risks in investing don’t just revolve around the tenant’s circumstances. You may experience change as well.

What happens if you suddenly fall ill, lose your job or split with your partner? Any of these situations can result in you not being able to afford the mortgage repayments on an investment property.

To avoid this happening, take out insurance on your property and for you. This may seem like an added and unnecessary expense, but it’s always best to be prepared.

Interest rate change

While at the moment the interest rate is great for investors, this may change. And with banks already having to manage the compulsory interest rate change for investors, it’s likely that this will impact investment property portfolios.

Also, as with anything in life, the interest rate will change and it will rise, so it’s important to be prepared. Never over-commit because you’re confident in a current interest rate. Ensure you can pay all repayments, even when the interest rate goes up. Talk to experts about what to expect in the coming years so you can prepare for it.

Consider keeping a financial buffer in place, such as a line of credit or offset account attached to the loan so you are prepared for any financial changes. Also, speak to an expert about the kind of loan you have taken out and whether it’s advisable to change it to a fixed or partially fixed loan.

Unexpected maintenance

It may look bright and shiny now but in a few years time, your property may need a facelift, and over time, there will definitely be some maintenance issues.

This is where a property manager can help out. By inspecting the property regularly, your property manager is a trustworthy source for whether maintenance is necessary, and whether it needs to be more than just a routine fix.

Never ignore maintenance issues, especially if they seem routine and mundane, because they can grow to something bigger.

Make sure you have a financial buffer to cover any expected and unexpected upkeep costs. Appliances need to be changed, walls occasionally need to be painted and bathrooms sometimes leak. Be prepared for these so you don’t run the risk of losing good tenants because you can’t afford to fix something.

Fluctuating housing market

The housing market peaks and dips and this variation is a risk you take when purchasing an investment property. The cyclical nature of the property market is largely dictated by economic factors, consumer sentiment and spending. To control the risk better, choose your property wisely, by considering location, amenities, condition and extra features.

Reducing the risks

There are some key things you can do to mitigate the risks involved in property investment.

Do your homework. Ask the right questions of agents and experts, choose your location wisely, and look at properties carefully before jumping in.

Ask the right questions of agents and experts, choose your location wisely, and look at properties carefully before jumping in. Choose your finance wisely. Purchasing an investment property is just as much about the loan as it is about the property itself. Finding a good loan deal can mean a huge difference to the net return on your investment and can significantly reduce financial risks associated with investing. Having a trustworthy lender behind you also means you can approach them for help when needed.

Purchasing an investment property is just as much about the loan as it is about the property itself. Finding a good loan deal can mean a huge difference to the net return on your investment and can significantly reduce financial risks associated with investing. Having a trustworthy lender behind you also means you can approach them for help when needed. Diversification is key. If you’re going to have a property portfolio, steer clear of choosing one particular area, but rather, look to purchase many types of properties in many locations.

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Ultimate List Of Abc Of Personal Finance Investing And Accounting

Between personal finance, investing, and accounting there are a lot of vocabulary, ratios, and technical terms. If this overwhelms you, then I have a special post for you today. Read on to see the ultimate ABC list for personal finance, investing, and accounting terms.

Quick Side Note:

Obviously, there is so much more than what is on this list, these are ones that I thought would be helpful to share! Also, if you like this post leave a comment and maybe I will do a part 2.

Before We Get Started:

Here are some other popular posts you may be interested in:

A is for Assets

If you are familiar with a company’s balance sheet you likely know the equation Assets = Liabilities + Stockholders’ Equity. But, what is an asset? An asset is something that will provide some sort of future economic benefit to a company. For example, land, inventory, building, cash, they can all be used in some way to generate sales, revenue, or other benefits in the future.

B is for Balance Sheet

As explained before the Balance is one of the 4 crucial financial statements that shows a company’s financial position at one point in time. The balance sheet can also be applied to your own life to understand what assets you have, minus any liabilities, leaving you with your approximate net worth. For example, if you own a $400,000 house and have $15,000 in the bank, but owe $200,000 in mortgage payments your net worth might be considered $215,000. Although, Robert Kiyosaki might argue differently about your house as an asset. Anyone who is familiar with Rich Dad Poor Dad knows what I am talking about!

C is for Current Ratio

One of the most common liquidity ratios when analyzing the financial position is the current ratio. It is calculated as Current Assets/Current Liabilities. Think about it, if you have $100 in short-term assets but owe $200 in short-term liabilities, you are unable to fulfill these payments without drawing down on more debt. This is why many investors want to see a current ratio of at least 1 or even higher for a better margin of safety.

D is for Debt

People are familiar with debt, but it comes in all different forms including student loans and credit cards. Debt provides leverage to companies because the interest expense is tax deductible and it only requires a fixed payment. For example, a $1,000,000 loan with a 5% interest rate requires an interest expense of $50,000 every year, but nothing more. Then, this $50,000 can be written off on the income statement before taxes, thus lowing taxable income and the amount of taxes paid. But, since it is a fixed obligation, even if the company has a rough year they need to figure out how to pay it.

E is for Equity

Equity is the alternative financing method to debt. When you invest in a stock, you are essentially buying equity or a small piece of the company. Equity is one of the popular financings for deals on shark tank. An entrepreneur comes in asking for $500,000 in exchange for 20% of their company. This is implying a valuation of $2,500,000 for the company since 100%/20% = 5 and 5 x $500,000 = $2,500,000. Yes, this is one of my favorite shows and if you want to learn more about it check out this post here:

F is for Forward PE

PE is a measure of Price/Earnings. If a stock is trading at $100 per share with EPS, earnings per share, of $5 this would be a PE of 20. Forward, PE is essentially the same calculation but with projected EPS. This is why sometimes on Yahoo Finance the regular PE won’t be available but the forward be is. This implies negative current EPS, but positive EPS in the future, which allows you to calculate the Forward PE.

G is for Gain

Gain is used for a lot of different reasons. If a company buys land and later sells it for more than the original cost this is called a gain, as long as it is not in the normal course of the business. In other words, if the company exists solely to buy and flip land, this would more than likely just be considered revenue. But, if a technology buys land for their office building but decides to relocate and sells the land for more, this would appear on the income statement as a gain. Gain is also what investors use to talk about their stocks market performance, usually in percentage or dollar terms.

H is for Hold

When reading analyst reports you will usually see variations of 3 different opinions, buy, sell, and hold. Buy and sell opinions are easy to understand and hold falls in the middle of the spectrum. It is a suggestion that if you do not currently own the stock, hold off on buying. But also, if you are a stockholder, it does not mean sell, just hold. Basically, do not initiate a transaction either way.

I is for Institutional Investor

People like you and me are considered retail investors, but companies with billions of dollars to invest are institutional investors. This can include hedge funds, financial service companies, higher education, companies investing pensions on behalf of their employees, mutual funds, and other similar investors.

J is for Junk Bonds

When it comes to bonds there are two classes of junk bonds and investment grade. The classification depends on their credit rating. The lower the rating, the higher the chance the bond will default and not make the payments. However, a lower rating means a higher potential yield, making these bonds much riskier. Typically below a BBB rating is considered junk bond territory.

K is for Kangaroos

This was actually one I was unfamiliar with and I had to do some research to find a K term. Supposedly, kangaroos are the slang name for Australian shares that are traded on the Australian Stock Exchange which is called All-Ordinaries Stock Exchange. I learned this from Investopedia so check out their article here.

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